(Reuters) - Home and auto insurer Allstate Corp’s (ALL.N) quarterly profit beat analysts’ estimates after it earned more from premiums following rate hikes, and the company said it was comfortable with the current growth in insurance pricing.
The largest publicly traded home and auto insurer in the United States has been raising rates in its homeowners business at an average of 8 percent over the last two years to offset higher catastrophe losses.
“We have got our pricing to the position where we are closer to where we want to be,” Chief Executive Thomas Wilson told Reuters.
Wilson said the average price increase was about 4.9 percent in the first quarter.
Allstate continues to expect “relatively modest increases in average premiums” of around 2 percent in its auto business.
The company’s first-quarter net income fell 7 percent to $709 million, or $1.47 cents per share, hurt by higher catastrophe losses.
It earned $1.35 per share on an operating basis in the first quarter. Analysts on average had expected earnings of $1.30 per share, according to Thomson Reuters I/B/E/S.
The company said earlier this month its first-quarter disaster losses were $359 million, higher than the $259 million it reported in the same quarter a year earlier.
“The reported number is higher this year because last year we had some reductions to catastrophe losses (as) we had overestimated in 2011,” Wilson said.
Premiums written during the quarter rose 2.5 percent to $6.63 billion.
Underlying combined ratio, the percentage of premium revenue an insurer has to pay out in claims, was down slightly at 87.7 percent.
Allstate shares were slightly up at $48.62 in extended trading after closing at $48.40 on the New York Stock Exchange on Wednesday.
Reporting by Anil D'Silva and Aman Shah in Bangalore; Editing by Maju Samuel and Sriraj Kalluvila